Utility and regulatory decision-making under conditions of uncertainty: Balancing resilience and affordability

Christopher Decker

Utilities Policy, 2018, vol. 51, issue C, 51-60

Abstract: Public utilities and their regulators frequently make decisions in conditions of uncertainty, where it can be difficult to confidently assign probabilities to possible future states. Choices can be particularly challenging where a utility faces requirements both to ensure that a system is resilient in terms of meeting service levels and quality standards, and that utility rates are affordable. This paper explores how utilities and regulators might respond to uncertainty, and sets out a menu of factors to guide decision-making. The paper also identifies some challenges for utilities and regulators in adapting their decision-making to account for uncertainty, balancing the objectives of resilience and affordability, determining who should make judgments in relation to this balance (consumers, regulators or experts), and allocating the risks associated with uncertainty across different parties (utilities, consumers, or taxpayers).

Date: 2018
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Citations: View citations in EconPapers (5)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:juipol:v:51:y:2018:i:c:p:51-60

DOI: 10.1016/j.jup.2018.01.007

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